Kabul Bank Fraud

Afghanistan has asked India to return two Indians, who were senior officials at the Kabul Bank which sank in a $935 million financial scam – an emblematic case of Afghan corruption – into which President Ashraf Ghani ordered a fresh probe on the second day in office.

Afghan government had asked Indian authorities to return the two Indians, Kabul Bank’s head of credit department and head of the audit committee, G Ramachandran and R Gopalakrishnan. Both of them were arrested in 2010, but set free on an undertaking from the Indian Ambassador that they will return for trial. They never returned and were convicted in absentia in 2013, to a four years’ term.

In total, 21 accused were convicted, but not the main shareholders, brothers of President Hamid Karzai and then Vice-President Mohammad Qasim Fahim who got immunity for returning loaned money.

The request for the two Indians’ return reached the Indian Embassy about two weeks after Ghani ordered on October 2, the reopening of investigation into Kabul Bank scam within 45 days.

According to sources, it is unlikely that India will accede to the request to return the two Indians.

Indian government usually avoids giving guarantees about private individuals in foreign countries.

It would be challenging for India to send them back “as the Indian legal system does not recognise trial in foreign countries in absentia, as it is not part of the system here.

Kabul Bank was the largest Afghan private bank, which used to distribute salaries to most Afghan civil servants.

In 2012, the Independent Joint anti-corruption Monitoring and Evaluation Committee (MEC) found that $935 million was siphoned out of the country, through a highly sophisticated network of fake companies and bad loans – most of it through just 19 organisations and individuals.

With losses equal to about 5% of Afghanistan’s GDP at that time, its reverberations continue to impact Afghan’s financial system even now.

A follow-up report of MEC published on October 2 this year termed the two Indian accused as “central to the execution of the Kabul Bank fraud”.